×

Why are we letting colleges rush us?

Students walking on a college campus
PhotoAlto | Odilon Dimier | Getty Images

This is the time of year that many thousands of American high school seniors and their parents are nervously checking their email every two minutes to see if acceptance letters from their top choice schools have finally arrived. I know this is an anxious and agonizing time of year for them, and I wish I could offer the sanest advice there is for everyone crushed by the pressures of the competitive college admissions game.

I mean it when I say I "wish" I could give you the sanest advice. Because the sanest advice for 95% of the parents pulling their hair out over a coveted admissions letter is to slow down and ask yourselves these questions: Is it a good idea to bet about $250,000 on a 17 or 18-year-old… I mean any 17 or 18-year-old? Wouldn't it be better to wait on shelling out that money or taking out that loan until your student "investment" is at least a little more mature? Wouldn't a year or three working in the real world, even in a minimum wage job, or enlisting in the military produce just a slightly older but much wiser horse to bet that quarter of million bucks on?

I think the answer to those questions is almost always "yes,"but I still can't give that advice to high school seniors and their about-to-be tuition paying parents. And the reason is that the collegiate path in this country is decidedly stacked in favor of younger kids who go all in for the four year on campus experience starting at age 17 and 18. And the reason, of course, is money. And both older and younger college students are paying the price for this greedy, but foolish educational culture.

Read MoreWhat makes an elite school?

American universities have become cash obsessed for the simple reason that they can. The more elite the college, the higher the demand to get into it, pay the full tuition, and give it massive donations sure to get the donor's name in the news. The average university endowment fund, especially at highly selective private schools, has skyrocketed in value since the 1960s. But the funny thing about having a lot of money coming in is that it tends to create a desire for more of it rather than a sense of accomplished satisfaction. And with federally-backed student loan programs guaranteed to keep the money coming in, there is virtually no disincentive for any university to reduce tuition or other costs. Just in case you don't believe my theory about college greed, I refer you to the just-released state audit of the nation's largest public college system, the University of California. The audit found that the UC schools have significantly reduced admissions requirements in recent years for out of state applicants. The reason? Out of staters pay more, much more, about three times as much in tuition alone. Tuition isn't the only source of the big bucks. The other cash cows include housing and meal plans, and that's where the profit margins for schools really soar.

But all those sources of green are less likely to come out of the pockets of older students for a number of reasons. Most of them won't choose to live on campus or sign up for that pricey meal plan. They're also less likely to take on a full course load, and thus will pay less per year in per-credit costs. Older students also tend to have this annoyingly better idea of what they really need from college to help them succeed in a real world they've already lived in and still are. So that means they're more likely to sign up for the courses in hard sciences or economics, rather than help prop up those pricey tenured professors in the Bavarian Poetry department. Even if they do pay as much as the teenagers in tuition and fees, servicing their legitimate needs costs more. And finally, let's not forget that more mature students are less likely to fall into the groupthink mentality so much of academia seems to be demanding from students these days. I mean, if you're a Middle East Studies "expert" teaching an undergraduate course in terror that repeatedly bashes America you probably don't want to face any challenges from a returning veteran who's actually been fighting terrorism for 2-4 years.

Read MoreKudlow: This is the real source of economic woe

The results of this anti-older student financial and intellectual bias are devastating. The dropout rate for students who start college in the U.S. after age 20 is a staggering 46% compared to 25% for kids entering before age 20. And for students who go to school part time while working, something older students are much more likely to do, the dropout rate is almost 69%. Older students in America aren't "dumber" or lazier, they're just facing an extremely uphill battle trying to fit into a system that's stacked against them.

Of course, the results for the younger students who do graduate aren't all that great either. There's a funny thing about 21-year-olds who graduate with hundreds of thousands of dollars in student debt: most of them can't handle it. The results aren't just the exploding total student debt in this country which currently stands at $1.3 trillion. We're also seeing fewer entrepreneurs and less innovation as more of our best educated young adults have to rush into established jobs to pay off those debts. Other recent grads just move back home as they and their parents seem to have failed to realize what $200,000 in debt can do to a young person's healthy and needed dreams of freedom and individualism. And that's just the financial cause-and-effect. The competitive, cookie-cutter nature of elite college admissions creates a culture of little or no risk taking. My extended group of about 100 friends and acquaintances at the Ivy League school I graduated from in the early 1990s has produced a grand total of one entrepreneur... one! And in our case, financial pressures/hefty loan debt wasn't even a factor. Had we entered our college or any college at an older and wiser age, I think many more of us would now be working for ourselves.

Read MoreTime to end prescriptions for drugs

We do have solid evidence of the opposite outcome from countries where most students start college much later. Israel is probably the best example, where almost everyone only enters college after their military service. And that added level of maturity and educational focus reaps enormous rewards for both the students and the entire country's economy. Israeli colleges have the oldest average graduates of any OECD country, (average age is 27), but also a negligible dropout rate. And Israel now trails only Canada, (where students also tend to be a bit older and more likely to be working as they study), as the country with the highest percentage of college grads. Even more importantly, the serious career-minded nature of Israel's older college students is a key factor in the "Start Up Nation's" booming tech and pharma industries which rely on incubator-stage companies so many of those college students create. Israeli universities are getting more and more addicted to the prestige and financial boost startups are giving them, not massive government-backed tuition loans. Don't get me wrong, Israeli universities are far from perfect, especially in the overly competitive and crowded liberal arts fields, but they are ideal places for serious students who know what they want and aren't looking at college as some kind of emotional amusement park.

It would be nice if I and lots of other parents could look at our teenagers and ultimately be the ones who decide if they're truly ready for college and the enormous financial risk higher education has become in America. We all deserve the chance to wait before being forced to sign on the financial and intellectual dotted line. But our colleges don't want us to wait. Like a car dealer pushing some kind of a sale-a-thon, they want our money NOW! NOW! NOW! And unless we want to put our kids up against some steep graduation odds, U.S. parents have little choice but to hurry up and pay up.

Commentary by Jake Novak, supervising producer of "Power Lunch." Follow him on Twitter @jakejakeny.